The Flawed Small Car Argument

More ranting about CAFE standards. I was thinking about a concept in transportation planning called latent demand. It goes something like this. A city determines travel times are too much in their community. So they build new freeways, wider roads, that in the short term reduce travel times. But people then start to buy property in areas previously considered too far from the city center, and kaboom, their travel times are back up where they were, or often higher!

That's the flaw in the implicit assumption that forcing smaller cars on the public is the solution to our transportation energy needs. You don't have to look too far from your circle of friends to realize the person with a new fuel-sipping Honda is more likely to take a long road trip than one who takes a gas-guzzling old pickup.

I'm a tree-hugger, and I want to see true environmental change, but this is not the way. In the end, for true progress, we have to get past the cliched simplistic solutions, and a solution not based in government but societal change of less consumption.

The Wrong (and Right) Way to Fuel Efficiency

I've been thinking about fuel efficiency standards this evening. The intent is to force auto makers to make more fuel friendly cards. Every automaker essentially has to meet quotas for fuel efficient cars. Especially as the economy worsens, new CAFE standards will kill the auto makers. With fuel prices so low, there is little incentive for the average consumer to chose to buy fuel sippers. Suddenly, the already delicately positioned auto makers may be left with huge inventories of small vehicles that they will have to sell at small, if any, profit.

Environmental advocates will protest that there is a need to reduce fuel consumption and greenhouse gas emissions. But really, even if we accept those goals, CAFE standards are the wrong way to go. They are the spineless politicians' way to avoid what is the truly effective solution - raise the cost of fuel! If fuel is more expensive, there is consumer demand for smaller cars (think a few months ago), and automakers will respond. This way, the government is not forcing them to make low-demand vehicles, but achieves the same result with a lot less economic pain.

Isn't it strange that politicians were complaining about high fuel prices and global warming at the same time?

Unlimited Calling, Text and Web for 50 Bucks!

Clark Howard reports on Boost Mobile's new offering - unlimited cell phone calling and web access for 50 bucks! Dang!! The downside is phone selection and accessibility (it's on the Nextel network) but 50 bucks includes not only unlimited calling and texting but also web access? Whoa!!

PS: International long distance isn't as cheap as calling cards, but it's certainly a lot cheaper than other cell phone companies. The rate to India is $0.30/minute, which in a bind is not shabby. Also, outgoing international texts are not free.

PPS: There is NO contract!!!

The History of the Castrati

I watched a play on the castrati last night. While the play itself was a bit out-in-left-field for me, it was interesting in that I had never heard about the castrati (yes, history was always a weak spot). These were boys who were castrated for the purpose of becoming great soprano players. I thought this might have been a myth, but this article from the Urological Sciences Research Foundation website suggests there were valid medical reasons why this was the case.

The genital mutilation caused a unique physical appearance too. An excerpt from the USRF article:

The manner in which the castrati appeared to their audiences can be judged from our clinical experience of eunuchoidism due to spontaneous primary hypogonadism. A tallness of stature, which was unusual in the 18th century, was commented upon by contemporary writers and was due to failure of the epiphyses to close at puberty, thereby allowing the unopposed action of growth hormone and other growth factors. There was a smooth pale skin, with, later in life, fine wrinkles around the eyes, no beard, plentiful scalp hair, a tendency to obesity, rounding of the hips, and narrowness of the shoulders; the pitch of the speaking voice was similar to that of a female.

I did find some disparities between what I read online and what was talked about in the play, so I guess take I have to everything with a grain of salt, unless I decide to make a trip to the library.

Dow Weighting

I've never been a fan of the Dow Jones index, but now there are distortions that make it seem downright silly! From John Maudlin's latest commentary citing Jim Bianco:

...if C, BAC, GM, AA, JPM, AXP and GE all open at zero, the DJIA loses 528.63 points. If IBM opens at zero, it loses 652.95 points [IBM has risen since then -- JM]. So, the DJIA says that IBM has more influence on the index than all the financials, autos, GE, and Alcoa combined.
The DJIA is not normal as the index committee is not doing their job during this crisis, possibly because to the political fallout of kicking out a Citi or GM. As a result, this index is now severely distorted as it has a tiny weighting in financials and autos.

I.O.U.S.A.

I've been wanting to watch the documentary film, I.O.U.S.A for a while now, and thankfully the movie makers have produced a 30-minute version you can watch for free on their website. This is a must-watch movie on how much of a debt crisis the US faces, with some nifty graphics and historical perspective. Watch it ... trust me, you'd be glad you did!

Get Ready for A Second Wave!

Just when things seemed to be looking up, looks like they're getting worse. Suddenly, job losses ... big ones. The unemployment had been creeping up, and that was no surprise in a recession, but suddenly it seems things have gotten a lot worse. Bloomberg reports 21,000 job losses in a day, by companies such as Hertz.

Circuit City's liquidation was big news, because it means another 30,000 decent-paying jobs, but also this - would people keep buying electronic items if they were nervous the companies that sold the products would not be in business?

Intel saw a 27% drop in revenues. That's from a company that's in a duopoly competition with a weak competitor!

And there's more bad news I could whip up from the news. And I think we'll get a lot more coming this year. But there's some perspective we need to maintain here ...

Take that 21,000 jobs in a day. It scared the bejeezus out of me! It's a big number. It's a lot of families that have to suffer. But it's about 0.01% of the American labor force. Unemployment might have cracked 7%, but it's still a lot below historical highs.

And take all this talk of the Great Depression. I don't know of anyone calling for GDP to drop 5% this year, or in any year. If my memory of history is correct, the Big Kahuna shaved 30% from GDP. Ouch!

So take a deep breath! Things will get worse. A lot worse. But we'll all survive.

Geithner Must Go!

So there's been some red faces over the recent revelation that Treasury Secretary nominee Tim Geithner did not pay his taxes from his IMF job from 2001 through 2004. After an IRS audit flagged his 2003 and 2004 returns, he paid the taxes for those years, but did not pay his overdue taxes for 2001-2002 until the Obama transition team pointed it out shortly before he was nominated.

President-elect Obama seems to be willing to call it an "innocent mistake", as do many in the press, but hold on! This isn't Rep. Charlie Rangel, who underpaid on his taxes. That was embarrassing because Rangel heads the committee that oversees the IRS. Geithner was working all those years and paid ZERO in taxes. That wasn't oversight, it was an attempt to defraud!! The alternate explanation is that he is pretty darned inept, which should rule him out as a custodian of our billions. Either way, this incident should disqualify him from becoming Treasury Secretary.